Partnerships to tackle the SME funding gap

Collaborative partnerships can remove barriers to SME borrowing, in turn boosting the global economy. In an already challenging market for businesses of all sizes, SMEs are facing the additional strain of being unable to access the working capital they need to manage cashflow, take advantage of growth opportunities or help them get through quiet periods.

by Martin McCann, CEO, Trade Ledger

The good news for SMEs – and the banks wanting to provide them with a better solution – is that the technology to resolve these pain points already exists. Companies like Trade Ledger provide the technology that lenders need in order to offer businesses fast, easy access to working capital – worthy of a digital economy.  A good example of how that is working in reality is our partnership with HSBC.  Working together, we created a digital solution that cuts the approval process for new receivables finance from up to 2 months, down to within 48 hours.

Utilising the interconnected ecosystem

Even the world’s largest commercial bank cannot do it all in-house, instead seeking agile, enterprise technology partners to fast-track digital transformation strategies and start adding value to customers sooner. We call this collaborative innovation.

Such partnerships are nothing new. Indeed ‘partnership’ seems to be something of a buzzword in the financial services industry today – thanks in part to open banking, but also Covid-19 forcing many to seek alternative solutions quickly in a time of crisis. It is encouraging to see banks, FinTechs and other payment services providers increasingly looking to build partnerships within the financial ecosystem, for the mutual benefit of both organisations as well as their underlying customers. Utilising purpose-built solutions of other providers, financial institutions of all sizes can get new solutions to market more quickly and at lower cost, helping them to remain highly competitive.

Another example of innovative collaboration is the way in which we work with Thought Machine, the cloud-native core banking technology provider. Together, with Trade Ledger’s loan origination and management capabilities, we are able to deliver a fully integrated technology stack for commercial lenders and banks. The API-driven data exchange enables a high level of real-time. Banks can now rapidly configure and launch new digital products such as asset-based-lending, invoice and receivables finance, with ease and control.

SME lending to boost the economy

By leveraging open banking APIs and data modelling to build a real-time view of the customer, banks can get a richness and quality of data that removes traditional blockers to extending credit to the mid-market and SME sectors.

I believe there is also a moral obligation for the industry to provide critical global supply chains with access to liquidity in order to fuel a global economic recovery. SMEs play a vital role in the global economy, so the industry must come together to remove the barriers that hold them back – including the inability to access external capital. Innovation happens where capital flows!